Housing association in biggest bond issue of 2012
A housing association has issued the most valuable own-name bond in the social housing sector this year.
Sanctuary’s £300 million 35-year bond issue attracted more than 20 investors and was priced today at a spread over gilts – the government’s cost of borrowing – of 172 basis points (1.72 per cent). That pricing gives an all-in cost of 5.08 per cent.
Money raised from the bond issue will go towards funding the 79,000-home landlord’s £750 million development plan, which aims to deliver more than 5,000 new affordable homes in England and Scotland.
‘Investors recognise Sanctuary has the resilience and capacity needed to meet the challenges that lie ahead, and the success of this transaction, which was more than two times oversubscribed, is a clear indication of investors’ confidence in our business model,’ said Craig Moule, finance director at Sanctuary.
‘We will use this injection of capital to deliver on our promises to provide much needed affordable homes and care services to our customers, and will continue our efforts to lead and innovate in the sector.’
Sanctuary’s bond was the cheapest 30-year plus own-name bond issued this year, although London & Quadrant raised £250 million on a 21-year basis at 4.62 per cent.
It is the second raid on the capital markets this week, following The Housing Finance Corporation’s £131 million ‘tap’ issue on Wednesday. The THFC bond, which featured 14 participant housing associations, was priced at 205 basis points, with a yield of 5.37 per cent. Like Sanctuary’s, the bond was twice oversubscribed.
The social housing sector has issued £1.35 billion of bonds in the first four months of 2012, eclipsing the total of £852 raised in the whole of 2011.